California cities have the least affordable housingand the most congested traffic in the nation.California's housing crisis results directly from severallittle-known state institutions, including localagency formation commissions (LAFCos), whichregulate annexations and the formation of newcities and service districts; the CaliforniaEnvironmental Quality Act, which imposes highcosts on new developments; and a 1971 state planninglaw that effectively entitles any resident in thestate to a say in how property owners in the stateuse their land. Cities such as San Jose have manipulatedthese institutions and laws with the goal ofmaximizing their tax revenues.
Meanwhile, California's transportation planninghas allowed transit agencies, such as SanJose's Valley Transportation Authority and LosAngeles' Metropolitan Transportation Authority,to hijack tax revenues that were originally dedicatedto highways so they can build rail empires thatwill do little or nothing to relieve congestion. Newhighway construction in the 1990s cut San Josecongestion in half, but congestion is again worseningas funds once spent on highways are nowdiverted to expensive and little-used rail transitprojects.
California should change its planning laws toforbid cities and counties from conspiring to driveup housing prices in order to maximize tax revenues.California and its urban areas should alsofund transportation out of user fees instead oftaxes, thus making transportation more responsiveto the needs of users instead of politically powerfulspecial interest groups. Other states shouldavoid passing laws that create similar conditions.These recommendations and eight others in thisreport will greatly improve the livability of San Joseand other California urban areas.